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The Stimulus Package — What's in it for the Tech Industry?

Wed, 02/25/2009 - 10:46am
Nancy Maas
Editor-in-Chief
As I write this editorial column today, the economic stimulus plan created by President Obama and Congressional Democrats to revive the economy is being debated in the House. If the bill becomes law, the proposed $825 billion package of spending and tax cuts would allocate billions of dollars for tech projects to improve our nation's infrastructure, improve healthcare, education and government funding, renewable energy, among other things. By investing in such projects, the administration expects to create between three and four million jobs.

Much has been written over the last several months about the President's interest in "renewing our information superhighway," and that this plan will include items that will likely lead to major increases in IT spending — especially for broadband deployment and technology for schools and healthcare. "There's an awful lot of investment in there that will be very good for the tech industry," says Robert Atkinson, president of the Information Technology & Innovation Foundation (ITIF), a Washington, D.C. think tank.

One funding proposal by the Appropriations Committee alone would provide $20 billion for healthcare technology, such as electronic medical records. This money would be used to modernize the health care system by computerizing all of the nations' medical records in the next five years. And $16 billion invested in science facilities, research and instrumentation to create new industries, new jobs and medical breakthroughs. In addition, expand broadband Internet access in rural and underserved areas.

It's that last one which has captured my attention. The Senate Finance Committee plans to make tax credits available to wireless carriers and others in the telecom industry that expand broadband network to rural and low-income urban areas. Commercial mobile wireless carriers would be eligible for a 20% tax credit if they offer broadband service at speeds of at least 3 Mbps downlink and 768 Kbps uplink in unserved and underserved areas. However, provisions in the House economic stimulus legislation include a total of $6 billion in broadband grants ($1 billion directly to wireless), but no tax breaks.

The question beckons: is such an offering really economically feasible and will it provide enough incentive for wireless carriers to make the investment to build the necessary infrastructure in order to bring wireless service to rural and underserved areas? Potential subscribers have to want it and be willing to support the cost of building the towers and infrastructure necessary to acquire the service. If the terms of this stimulus package only provide wireless carriers with grants rather than tax credits, the benefits to such tech companies may be minimal at best.

Some of the projects in the plan sound too good to be true and perhaps they are, but it is a start to improve the current economic situation and it will be interesting to see which projects actually get off the ground, provide new jobs and are able to sustain themselves financially,

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